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TMI Blog2019 (5) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... OF INCOME TAX [ 2016 (8) TMI 810 - ITAT HYDERABAD] We are satisfied that there existed reasonable cause for the assessee accepting the loans in cash and particularly since the loans have been repaid by way of RTGS. - Decided in favour of assessee. - ITA No.229/Hyd/2019 - - - Dated:- 10-5-2019 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For the Assessee : Shri K.C. Devdas For the Revenue : Shri M.M. Murthy Naik, DR ORDER PER SMT. P. MADHAVI DEVI, J.M. This is assessee s appeal for the A.Y 2011-12 against the order of the CIT (A)-1, Hyderabad, dated 19.12.2018 confirming the levy of penalty u/s 271D of the I.T. Act. . Brief facts of the case are that the assessee, a salaried employee, filed his return of income for the A.Y 2011-12 on 25.07.2011 admitting an income of ₹ 2,81,773/-. During the assessment proceedings u/s 143(3) of the Act, the assessee submitted revised computation of income, offering total income of ₹ 4,52,270/- thereby offering an additional income of ₹ 1,70,494/- under the long term capital gain o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Additional Commissioner of Income Tax on 09.02.2017 after a long delay of 22 months and therefore, the very initiating proceedings were without jurisdiction, bad in law and therefore, is to be quashed. 4. The learned CIT (A) failed to observe that the order u/s 271D was passed by the Add. CIT as against the Jt. Commissioner of Income Tax, thus rendering the entire proceedings as void-ab-initio. 5. The learned CIT (A) failed to note that the AO has initiated proceedings u/s 271(1)(c) of the I.T. Act, 1961 on 29.03.2014 and therefore, initiations of parallel proceedings after 22 months by the ACIT, Hyderabad clearly demonstrates that the pre proceedings u/s 271D were unwarranted, excepting invalid, bad in law and not to be quashed . 4. The learned Counsel for the assessee, Shri K.C. Devdas submitted that the assessment order was passed on 29.03.2014 without making any disallowance or the addition on account of receipt of loans in cash, but the penalty was initiated by issuance of notice dated 9.2.2017 which is beyond a reasonable period. Therefore, according to him, the penalty itself is to be held null and void. He submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceptable, for the simple reason that the issue has already been adjudicated by the Special Bench and therefore, we are bound by the categorical pronouncement of the Special Bench in this regard. Therefore, the proceedings initiated, for violation of Section 269SS, U/s 271D are within limitation. In our view, once the assessment order has been passed on the premise of acceptance of cash deposit from various persons and confirmation has been produced by the assessee in the quantum proceedings and penalty proceedings. In our view the revenue has accepted the explanation of cash deposit in the bank account, in the quantum proceedings , therefore no penalty proceeding were initiated in the quantum proceedings . Since the revenue has accepted the explanation of cash in the assessment proceedings, therefore, the same set of facts and documents cannot be made basis for imposition of penalty. The assessee, has submitted the reasons for accepting the cash in the quantum proceedings and the said reasons were accepted by the A.O and the same reasoning should have been accepted in penalty proceeding as well. In our view, now in the quantum proceedings U/s 271D of the Act, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posit, if it exceeds more than ₹ 20,000/- in cash. 11. Section 271D of the Act provided that a person who takes or accepts any loan or deposit in contravention of the provision of Section 269SS of the Act, he would be liable to pay by way of penalty a sum equal to the amount of the loan or deposit so taken or accepted. 12. Section 271D of the Act caused undue hardship to the tax payers where they took a loan or deposit in cash exceeding ₹ 20,000/- even where there was a genuine or bona fide transaction. The legislature accordingly, introduced Section 273B of the Act, which provided that if there was a genuine and bona fidetransaction and the tax payer could not get a loan or deposit by an account payee cheque or demand transaction for some bona fide reason, the authority vested with the power to impose penalty had a discretion not to levy the penalty. 13. In Chamundi Granites (P.) Ltd. (supra) the Supreme Court considered the provision of Section 271D and 273B of the Act and held:- It is important to note that another provision, namely section 273B was also incorporated wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id, we find that even though the assessee had taken a loan in cash, nonetheless, the loan transaction was a genuine transaction and was routed through the bank account of the assessee which clearly shows the bona fides of the assessee. The cash given by the lender was not unaccounted money but was duly reflected in their books of account. The Assessing Officer also accepted the explanation and found the transaction to be genuine. The contention of the learned counsel for the appellant that since there was no urgency, the assessee could have taken the loan through cheque and should have processed the matter through regular banking channels is immaterial, inasmuch as the genuineness of the transaction has not been disputed by the Assessing Officer. Further, we find that the cash was deposited in the bank account of the assessee and the money was thereafter, routed through the banking channel for payment to the government for converting the land into free hold property. 17. In the light of the aforesaid, we are of the view that reasonable cause had been shown by the assessee and the provisions of Section 273B of the Act was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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